The key point of Coasean theorem is that it doesn't matter how property rights are allocated. Whether the right to pollute is allocated to the factory owner or the poor riparian soul reliant upon the health of the river, the same efficient level of pollution is reached after cost-free bargaining.
Does the factory necessarily have to engage in this dialogue? If the factory just doesn't want to pay the affected fisherman, what would happen? Surely just defining property rights doesn't guarantee that the factory will honour them?
Brilliant way to explain the theorem. Thank you for this.
This really helped me with my ongoing assignment. Thank you so much for the great explanation.
Very interesting because you emphasize the problem with the transaction costs which is why we cannot really implement Coase theorem in practice
depending on the situation right . if a buiness is harming 10 people then we can implement it
The key point of Coasean theorem is that it doesn't matter how property rights are allocated. Whether the right to pollute is allocated to the factory owner or the poor riparian soul reliant upon the health of the river, the same efficient level of pollution is reached after cost-free bargaining.
Does the factory necessarily have to engage in this dialogue? If the factory just doesn't want to pay the affected fisherman, what would happen? Surely just defining property rights doesn't guarantee that the factory will honour them?
Perfectly explained! Thanks so much !
thank you, this is very helpful.
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